India Markets Weekahead – Opportunity for those who missed out rally

By Ambareesh Baliga
February 10, 2013

(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)

It was a second straight week of losses of 1.59 percent with the Nifty closing at 5,903. As discussed in this column a fortnight back, we are in a phase which would tire out the participants and change the mood to a negative consensus on the street.

After the sharp correction in most of the midcap counters, the mood has turned circumspect. The corporate results declared in the last few days too did not have much to cheer the markets but Central Statistics Office (CSO) GDP estimates of 5 percent for the current fiscal year seemed to have knocked the bottom.

The finance ministry, especially Finance Minister P Chidambaram, was quick to rebut these estimates as based on extrapolation of the past data which does not account for the green shoots seen in the last few months.

He estimates the current year growth to be closer to 5.5 percent and expects India to grow between 7 percent and 8 percent over the next few years as that is the minimum growth required to gainfully employ the fresh graduating crop every year.

The HSBC services PMI showed a marked improved to 54 from 51.7 in December. The U.S. trade deficit is at a three-year low indicating that the economic recovery is better than estimated. European leaders have been able to reach an agreement on the long term budget.

China’s trade data also beat analyst estimates and inflation retreated to 2 percent in January confirming that the recovery should continue into the Lunar New Year of the Snake.

NTPC’s Offer for Sale got a genuine institutional response due “right pricing” of the 114 billion rupees issue. Though the mood on the street was tepid and this was the third largest offering till date after Coal India and Reliance Power, the response suggests.

This could be an opportunity for those who have missed out the rally in the last 5-6 months as most of the mid caps are available at a steep discount to their recent highs.

 

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